January 31, 2006

State of the Union Address and Entitlement Spending:
Time is on Their Side

Filed under: Economy,Soc. Sec. & Retirement,Taxes & Government — Tom @ 3:30 pm

(Moved to the top for the rest of today
because of tonight’s State of the Union speech)

In the midst of a few days of enthusiasm about the current economy, I indicated at this post in late December that there were things to worry about. I would explain why in January.

Well it’s January 31, so I’d better get to it.

The simple explanation is that I have serious doubts about whether this country is up to the task of fixing Medicare and Social Security. Both of these programs, however well-intentioned, have created future obligations of nightmarish proportions that have been pushed onto future generations, and they get worse with each passing day — which, unfortunately, is just fine with the people defending the status quo.

A Christian Science Monitor article last week that received way too little notice explains why, and echoes what I have said previously about these runaway programs, except that writer Patrick Chisholm thinks we’re too far gone:

Triumph of the redistributionist left
Even with Republicans in control, trends are decidedly in favor of massive redistribution of wealth.

The political left in America is emerging victorious.

….. It’s about something much deeper; namely, that the era of big government is far from over. Trends are decidedly in favor of that quintessential leftist goal: massive redistribution of wealth.

….. While the left did not get its way on tax cuts, this may be only a temporary defeat: Freewheeling spending has made future tax cuts politically a lot harder.

….. Discretionary spending is dwarfed by mandatory spending – spending that cannot be changed without changing the laws. Shifting demographics combined with an inability to change those laws virtually ensures that, through programs such as Social Security and Medicare, America’s workers will be forced to redistribute a larger and larger portion of their income to other Americans in the coming decades.

….. Time is on the side of the left. As politically difficult as it is now to reform Social Security or Medicare, as the years pass it will get even more difficult. The swelling number of retirees will further strengthen the senior lobby. And as Social Security’s surplus evaporates, there will be less money available with which to establish personal savings accounts.

The prescription drug benefit was another victory for the redistributionists. While it is true that the left wants even more spent on that program, Republican efforts have netted an additional $1.2 trillion being redistributed over the next 10 years.

….. The left has a powerful institutional force on its side: “public choice” economics. Our system of government is highly responsive to vocal groups that lobby for subsidies, government programs, and other special favors. Since the costs are spread out among all taxpayers while the benefits are concentrated among smaller segments of the population (such as retirees, in the case of Social Security and Medicare), the taxpayers have much less of an incentive to lobby against the measure while the beneficiaries have a huge incentive to lobby for it. Whenever those subsidies are threatened, the lobbies launch their barrages of politically effective complaints.

Forces favoring the left are virtually locked in. Even with Republicans in control, big government is destined to get a lot bigger.

This all sounds like something I said back in August about Social Security, but I had a little more hope:

Those who oppose individual accounts know that if they run out the clock for something like 5-10 years, it will become very difficult financially to pull off the transition. It’s sad but true: These people would rather have the elderly depend on the ability and willingness of future generations to finance part or all of their retirement than give them full control over their financial destiny.

I get the sense now that the window of opportunity is closer to 5 years.

Individually controlled Social Security investment accounts and comprehensive Medicare reforms can stop the bleeding and return financial control to the generations that follow us. Stick with the current systems, and in less than 10 years we’ll become the upside-down place that Germany is today, with pension and healthcare obligations so overwhelming that the economy our children and grandchildren have to live in will be stuck in the mud.

I believe that part of the reason the financial markets have not performed as expected during the prosperity of the past 3 years is a sense that we are not going to get a grip on these twin monsters. After last year’s not-serious-enough attempt to sell Social Security reform, where the administration did not even produce a plan of its own, I can see why pessimism abounds.

This brings us to the State of the Union address tonight. Mr. Bush has many critical issues to cover, but after the War on Terror, controlling entitlement spending for the long-term has to be second in importance.

One of the main reasons I started this blog almost a year ago was my belief that 2005 was going to be the year Social Security reform would become a reality; in fact, my very first official post was on Social Security. Was I ever wrong.

Now Mr. Bush is down to two remaining chances to fix Social Security and Medicare on his watch, namely this year and next (2008? Dream on). He can either nibble at the edges this year, show tangible progress, use it as a springboard for 2006 midterm election success, and pass major reforms in 2007, or go for the home run this year.

Which is better? It’s up to him to decide, and then to convince us why his choice is right. Saying little and merely “seizing a political opportunity” if it comes in the next two years, as Fred Barnes suggests Mr. Bush will do in today’s OpinionJournal.com column (requires free registration), is not a viable option — not when time is NOT on your side.

Poll: Chinese Believe in Capitalism a Bit More Than We Do

Filed under: Economy,Taxes & Government — Tom @ 2:35 pm

Polls are always difficult things to place too much trust in, but……

It’s interesting, as this Wall Street Journal editorial notes (requires subscription), that the Chinese people are big believers in capitalism:

Comrade Capitalists
January 31, 2006; Page A14

Though Mao Tse-tung’s portrait still hangs in Tiananmen Square, a recent poll shows that the Chinese are crazier about capitalism than are Americans. In fact, they top the world-wide rankings in their zeal for free markets. No wonder Mao isn’t smiling.

In a poll conducted for the University of Maryland’s Program on International Policy Attitudes between June and August last year, fully 74% of Chinese citizens said they agreed with the statement “the free enterprise system and free market economy is the best system on which to base the future of the world.” The Philippines, at 73%, and the U.S., at 71%, were second and third. The poll, which surveyed 20,791 people in 20 countries, seems like a pretty good snapshot of current sentiment, as such things go.

Remarkable, isn’t it, that residents of the Middle Kingdom have maintained their appreciation of the benefits of free enterprise through six decades of oppression and economic backwardness imposed by their Communist cadres? Then again, for a culture in which common New Year’s greetings include “I wish you happiness and many riches” and “may you make great profits,” should we be surprised? Most Hong Kong residents are spending the current Chinese New Year holiday politely distributing packets of crisp new cash to friends and family. They have to earn this gift cash somehow.

I’d be interested in knowing if this was a poll of the Mainland or if Hong Kong, with its aggressive capitalist tradition, was included as part of the sample.

Regardless, this is, with all the qualifications associated with polls, good news. Now if only the Chinese people ran their own country.

Is USA Today’s Kathy Kiely Obsessed, or Is It Just a Glitch?

Filed under: MSM Biz/Other Bias,Taxes & Government — Tom @ 12:21 pm

From her USA Today’s piece on the Alito confirmation, check out this gibberish (3rd paragraph as it appeared at 12:15 PM; obviously it could be corrected at any moment or taken down, NOTE-USAT updated and fixed — see UPDATE below):

Alito, 55., who has compiled a mostly conservative record during 15 years on the bench, becomes the 110th. justice to serve on the high court. He succeeds retiring Justice Sandra Day O’Connor,who has provided a deciding vote in favor of maintaining a woman’s right to end her pregnancy and other controversies women’s right to terminate their pregnancies, among other controversial matters.

So is Ms. Kiely obsessed, or is it just a glitch? Given that abortion is the first legal issue mentioned in her report, my money is on “obsessed.”

Cross-posted at NewsBusters.org.

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UPDATE: USAT did a 1:54 PM update (same link) and corrected the paragraph, now the fourth, which now reads as follows:

Alito, 55, who has compiled a mostly conservative record during 15 years on the bench, becomes the 110th justice to serve on the high court. He succeeds retiring Justice Sandra Day O’Connor, who has provided a deciding vote in favor of maintaining a woman’s right to end her pregnancy, among other controversial matters.

Coretta Scott King, RIP

Filed under: General — Tom @ 10:44 am

The wife of the Reverend Martin Luther King has passed away.

Mrs. King, your Heavenly Father awaits.

No This Is NOT My Spanish-Language Web Site

Filed under: News from Other Sites — Tom @ 9:42 am

Wow, it’s been out there for years, and I never knew (HT – a relative wondering what the bleep is going on).

The WHOIS registration is here, in case you doubt.

I know: The registration expires in a week. I’d be tempted to bid if the adult female models are part of the deal, but I don’t think that’s how it works.

Bizzy’s AM Coffee Biz-Econ Links (013106)

Free Links:

  • US Savings Rate was a negative 0.5% last year — This is the lowest rate since the early 1930s during the Depression, and this number is more troubling than it first seems. That’s because, as I have always understood it (Pending Resolved — see comments 1 through 4 below), it includes money put into retirement plans such as IRAs and 401(k) plans as positives. Since hundreds of billions of dollars go into those plans every years, that means people are negatively saving (i.e., borrowing) more than what they’re saving for retirement. This would not appear to be sustainable unless everybody decides that retirement is not necessary.
  • This bit of info seems inconsistent with the tiny 1.1% increase in 4th Quarter 2005 Gross Domestic Product, though it ties in to the previous item — “December Spending Surges as Consumers Dip into Savings”
  • Tony Blair Says Global Warming is Advancing — though it’s not necessarily contradictory, he should explain what he said on Sunday in light of what he said about nobody being willing to accept the Kyoto Protocol’s limitations back in September.
  • I find it amazing how often statistics that don’t even pass the stench test, let alone the smell test, get by the people who transmit them and, when they’re around, their bosses. Eugene Volokh noted that an Oregon college paper reported that 2,000 rapes occur in the US every 5 minutes, when the truth is it’s 2,000 rapes each day, or one every 5 minutes (of course anything more than zero is unacceptable). Oops.
  • Oil execs take cue from high-tech heads (HT Drudge) — I asked why they didn’t consider doing this yesterday (2nd item). I didn’t know they visited here (ha).
  • Exhibit A — Americans are divided ideologically on their perceptions of the economy. People on the left think it stinks, people on the right are generally pleased. CNN television reported that situation, and, within a half-hour, brought on an “analyst” with ideological biases that weren’t disclosed. Ken at The Free Market Project reports.
  • Balloons instead of towers for remote-area wireless service — If it works, bring it on.
  • The fastest-growing economy in the world last year was ……. IRAQ, at 52.3% (HT Don Luskin). More details about where the country stands in comparison to the rest of the world is here.

Man’s Wallet Returned, after 39 Years

Filed under: Positivity — Tom @ 6:14 am

With the money still in it (HT Good News Blog):

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January 30, 2006

Slippery, Meet Slope: EU Wants Google to Agree to Content Regulation

It didn’t take long, did it?

Thanks to their agreement to cooperate with the government of China in search-content censorship, exactly what credible defense does BizzyBlog Internet Wall of Shame member Google have against this idea?

Google challenges EU plan to regulate the internet
By Andrew Murray-Watson (Filed: 29/01/2006)

Google, the giant internet search company, is to lead industry opposition to new proposals from the European Commission to regulate online content.

Google was criticised for bowing to pressure from Beijing.

The company, which last week said it would self-censor its Chinese search engine to appease the country’s government, objects to the commission’s proposals to extend regulations in the Television Without Frontiers directive (TWFD) to cover video content shown on the internet.

James Purnell, the minister for creative industries, has backed Google’s stance.

He said: “There is no benefit to the consumer that justifies this move. This increased scope could mean significant regulation of the internet and stifle the growth of new media services. That would raise prices for consumers and deprive them of potential new services.”

Existing national laws that regulate TV broadcasting – for example, the British ban on tobacco advertising and child porn – were sufficient, he added.

If the proposals became part of European law, Purnell said, “in 10 years our successors will bemoan the handicaps we gave to European industry and the restraints we put on free speech”.

“For example, the proposals suggest that member states should ensure that media service providers. . . do not offer material which contains incitement to hatred on grounds of, for example, disability or age. I’m the last person to say that issues like this are not important and of course we have been discussing race and religious hatred in our own Parliament only recently.

“But what that debate showed was that these are wide-ranging issues on which there are different, strongly and legitimately held opinions and where intervention must have the strongest justification. Some member states – and I don’t just mean the UK – will have serious difficulties with such an approach on grounds of freedom of speech.”

Other opponents to the new proposals include James Murdoch, the chief executive of British Sky Broadcasting.

The plan to extend the scope of the TWFD is set to go before the European Parliament later this year. The new proposals, if implemented, will govern material shown on the internet which originates in EU member states. The internet industry fears that some content providers will move outside the trading bloc rather than submit to regulation.

Thanks to Google and other Wall of Shame members, China, the EU, and other governments may be able to accomplish through high-tech companies without conscience what the UN and EU utterly failed to do in Tunisia last November.

NYT Columnist: Bush Reads “Mao: The Unknown Story,” Confirming That It’s a “Conservative” Book

As noted at this NewsBusters post last week, when it became known that President Bush was reading “Mao: The Unknown Story,” Elisabeth Bumiller of the New York Times pigeonholed the book:

The book might at first seem an odd choice for Mr. Bush, whose taste in biography, like that of other American presidents, runs to previous occupants of the Oval Office. But it is not so surprising given that “Mao: The Unknown Story” has been embraced by the right as a searing indictment of Communism.

As you can see from this October post that addressed Times columnist Nicholas Kristof’s review of the book, it hasn’t exactly been “embraced” by bitter-enders on the left. Despite the book’s painstakingly thorough chronicle of Mao’s horrible death toll, Kristof still holds that Mao was “not all bad” for China (most of this quote is also at this “TimesWatch Worst of 2005″ NewsBusters post):

But Mao’s legacy is not all bad. Land reform in China, like the land reform in Japan and Taiwan, helped lay the groundwork for prosperity today. The emancipation of women and end of child marriages moved China from one of the worst places in the world to be a girl to one where women have more equality than in, say, Japan or Korea. Indeed, Mao’s entire assault on the old economic and social structure made it easier for China to emerge as the world’s new economic dragon.

Just like that, 60-70 million deaths become collateral damage in the (fictional) advancement of women’s equality (see: “one-child policy”) and supposed economic rebirth (which didn’t begin until years after Mao’s death, and never would have happened while he remained alive, even if he had lived to be 100).

What I’m getting from all this is that “Mao: The Unknown Story” is being “embraced by the right” because it is the unvarnished if uncomfortable truth, while far leftists, in the face of facts that can only be disputed at the margins, if at all, aren’t happy with the book, because believing it would force them to let go of their 1960s romantic notions of Mao. Fortunately for those steeped in reality, you can be an open-minded person on either side of the political spectrum and accept the profoundly important work the authors, Jung Chang and Jon Halliday, have done to shine the light of truth on one of history’s most evil people.

But thanks for the compliment to conservatives, Liz. And get a grip, Nick.

And, finally, I have to wonder if the Left’s near silence over Google’s Chinese censorship isn’t a hangover from its reluctance to acknowledge the full, ugly truth about Mao.

Cross-posted at NewsBusters.org.

Rhode Island RINO Report: Lincoln Chapstick

Filed under: Taxes & Government — Tom @ 2:25 pm

Item: Chafee will vote against confirming Alito

Chafee

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UPDATE: Other comments:

  • S.O.B. Alliance Member Large Bill“Can anyone explain why the Republican National Committee is supporting Chafee against Mayor Steve Laffey in the upcoming primary?”
  • From a commenter at Anchor Rising“The President has the right to choose his nominee to the Supreme Court. The Senate should only reject a nominee if the individual is not qualified. Alito is very well-qualified and Chafee should have voted for him.”
  • S.O.B. Alliance Member Weapons of Mass Discussion“Why continue to give the GOP money to support people like this?”

UPDATE 2, Feb. 1: An e-mail I get occasionally from Evans-Novak says, “Sen. Lincoln Chafee (R-R.I.) may have gotten a White House OK to vote against Alito, but this will not help him with GOP primary voters back home. It was not a wise decision for him. He is increasingly looking like a one-termer.” Giving the OK was also not a wise decision by the White House.

Internet Wall of Shame: Google-China Update

RConversation is still in daily multilink mode. Yesterday’s helping is here.

Nicholas Carr says Google is getting blasted more than other Wall of Shame members because its “Do No Evil” slogan represents a big “Hit Me” sign:

I think the reason Google is getting its feet held to the fire is simple: It asked for it. As soon as the company broadcast its “Don’t Be Evil” pledge, it guaranteed that any time it stepped into ethically ambiguous territory it was going to touch off a firestorm in the press – and, in turn, draw the attention of the public and the public’s media-hungry elected representatives. It’s the old Gary Hart effect. Plenty of Senators get a little on the side without finding their dalliances on Page One, but as soon as Hart claimed to be pure, he guaranteed that reporters and cameramen would come knocking on the door of his lovenest. Whether it was hubris or just naivete that led Google to proclaim its moral purity can be debated, but from a business standpoint it was a surpassingly dumb thing to do – and the consequences were entirely predictable.

Finally, The Wall Street Journal (link requires subscription) stakes out ground in the middle:

China’s leaders have made a bet that they can have economic growth, and the exposure to the outside world that it requires, while maintaining political control. In the long run, we continue to think that’s a losing bet. Google may have its own business dilemma, but the modern dictator’s dilemma is that the path to economic progress demands a loosening of centralized control on just about everything, including information.

As for Google’s executives, we also hope that, even as they make their business compromises with the Communists, they don’t forget their larger obligations to promoting the freedom that has made them as rich as they are.

The wild card is whether Google and other kowtowing search engines will hasten the growth of freedom, slow it down, or kill it. It would be nice if everyone, including those on the left who seemingly aren’t paying attention, would stay on Google’s case about the obligations The Journal mentioned.

Overpaid and Underworked: Exhibit A Is Joel Stein

Filed under: Business Moves,MSM Biz/Other Ignorance — Tom @ 9:20 am

For comic relief, first put the coffee down.

Then go here to see what BizzyBlog is supposedly worth (if you spit out coffee, it’s not my fault).

If you agree with the valuation, contact me for my PayPal account data and send the money. I’ll quit and start a new blog tomorrow.

It was $107, 827.14 (cough, cough) as of 11PM on Jan. 29; it has bounced between $54K and $108K during the past week. I am really impressed at their ability to nail the value down to the penny.

Then again, maybe the valuation isn’t so unreasonable. In fact, to borrow a political word, it might be “conservative.”

I say that because I learned in the course of Hugh Hewitt’s interview with Clueless Joel Stein of the Los Angeles Times about his controversial “Warriors and Wusses” column (requires free registration, and will probably be archived by Feb. 1) that he is paid (notice I didn’t say “earns”) over $75,000 per year (about 75% of the way through the interview transcript) — for one column per week.

So BizzyBlog is either hopelessly undervalued, or Joel Stein is ridiculously overpaid (too bad for me it’s the latter).

Memo to LAT: I’ll write TWO better columns every week for $50 grand a year. Just pick the two submission days. I’ll even deal with all the brickbats Patterico throws my way.

Just leave me alone for the rest of the week, so I can make three more deals just like this one….. and still keep my $108,000 blog.

No wonder the stocks of mainstream newspapers, including LAT’s parent The Tribune Company, are performing so poorly.

Bizzy’s AM Coffee Biz-Econ Links (013006)

Free Links:

  • Hope they’re right — Economists quoted in USA Today on Friday afternoon think the weak 1.1% showing for GDP growth was a temporary setback, and not an indicator of slower growth to come.
  • Why didn’t the oil companies think of this? (/sarcasm) — US Internet companies snub Congressional hearing: “The leading US-based Internet companies are showing little interest in attending a Congressional briefing on worries that the firms are bending to the wishes of China’s censors. Microsoft and Cisco Systems have refused to attend the event, while Google and Yahoo are non-committal, officials said.” One word: Subpoenas.
  • I am SOOOOO not sorry this happened — Pixar axes Toy Story 3. Usually the third time is NOT the charm for a movie sequel.
  • I hope he asked Mrs. Berlusconi first — (Italian Premier) “Berlusconi Vows No Sex Until Voting” on April 9.
  • Once more, with feeling — Alan Greenspan retires on January 31, and to celebrate the Fed is expected to raise interest rates by another quarter-point. It’s probably necessary to keep inflation from coming back, but still, what a party pooper.
  • A lot of people left holding VERY big, empty bags — United Airlines’ parent company reported a $16.9 billion loss for the 4th quarter: “Most of those on-paper losses will be reversed within days, reflecting unsecured claims that will be settled for a fraction of the charges. The company is expected to disclose a multibillion-dollar gain when it leaves bankruptcy next week, formally accounting for overturning many of the losses.” Among the bagholders: UAL employees, whose pension plans were terminated back in May.
  • Now this is a cool idea — “Apple Offers College Lectures Via Podcasts.” No word on whether the company will make the lecture content or the lecturers themselves more interesting.
  • 40-year Quagmire Update — In a supposedly magnanimous move by the government, Vietnamese dissident Nguyen Khac Toan was released from prison after his jail sentence was reduced from 12 years to 4. But he still faces three years of house arrest. His crime? “Toan was judged to have emailed details about farmers’ demonstrations to Vietnamese groups overseas.”
  • What Google is helping to perpetuate“The editor of a campaigning Chinese newspaper supplement has denounced the authorities’ decision to shut it down.” According to the article, China is ranked 159th out of 167 countries in the Reporters Without Borders Press Freedom Index.
  • China’s largest commercial bank, ICBC, just sold 10% of itself to a group of three different US financial firms. The fact that these two sentences wrap up the piece gives me reason to believe that they have no idea what they’re getting into: “China’s biggest lender, it announced last week that its 2005 profit had jumped by more than 20%. During 2005 it received a $15bn capital injection from the government to help it cope with a legacy of bad loans.”

Positivity: Gates Pledges $900 Million For Tuberculosis Eradication

Filed under: Positivity — Tom @ 6:13 am

This a tripling of his Foundation’s current level, and is necessary because the disease is as deadly as ever (HT, and content from after the first three paragraphs, to Happy News):

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January 29, 2006

Wisconsin’s Governor to Inner-City Kids: You’re Stuck

Filed under: Consumer Outrage,Taxes & Government — Tom @ 5:52 pm

Yesterday I posted on “Wisconsin Tort-ure,” and noted how the state’s governor, Jim Doyle, with the help of the state’s courts, is turning its legal system into an antibusiness, anticonsumer quagmire.

Apparently he’s not content to stop there. He’s also determined to limit the effectiveness of the pioneering school-voucher program in the state’s largest city (link may require registration):

Milwaukee’s Parental Choice Program, enacted with bipartisan support in 1990, provides private school vouchers to students from families at or below 175% of the poverty line. Its constitutionality has been supported by rulings from both the Wisconsin and U.S. Supreme Courts.

Yet Mr. Doyle, a union-financed Democrat, has vetoed three attempts to loosen the state law that limits enrollment in the program to 15% of Milwaukee’s public school enrollment. This cap, put in place in 1995 as part of a compromise with anti-choice lawmakers backed by the unions, wasn’t an issue when only a handful of schools were participating. But the program has grown steadily to include 127 schools and more than 14,000 students today. Wisconsin officials expect the voucher program to exceed the 15% threshold next year, which means Mr. Doyle’s schoolhouse-door act is about to have real consequences.

“Had the cap been in effect this year,” says Susan Mitchell of School Choice Wisconsin, “as many as 4,000 students already in the program would have lost seats. No new students could come in, and there would be dozens of schools that have been built because of school choice in Milwaukee that would close. They’re in poor neighborhoods and would never have enough support from tuition-paying parents or donors to keep going.”

There’s no question the program has been a boon to the city’s underprivileged. A 2004 study of high school graduation rates by Jay Greene of the Manhattan Institute found that students using vouchers to attend Milwaukee’s private schools had a graduation rate of 64%, versus 36% for their public school counterparts. Harvard’s Caroline Hoxby has shown that Milwaukee public schools have raised their standards in the wake of voucher competition.

Mr. Doyle says he will agree to lift the cap to 18%, but only if it’s tied to a change in the school-aid formula that he knows would never pass the Republican legislature–particularly in an election year. So instead of building on this education success, Mr. Doyle and his union allies are poised to close the book.

….. What the Milwaukee (example shows) is that unions and their allies are unwilling to let even successful voucher experiments continue to exist. If they lose one court case, they will sue again–and then again, as long as it takes. And they’ll shop their campaign cash around for years until they find a politician like Jim Doyle willing to sell out Wisconsin’s poorest kids in return for their endorsement. Is there a more destructive force in American public life?

Don’t get me wrong. A 64% graduation rate for the voucher schools, while nothing to celebrate, is at least an improvement. But 36%? Isn’t anyone associated with Miwaukee’s “regular” public schools ashamed, or even the least bit embarrassed?

So Wisconsin’s governor (yes, he’s a Democrat) wants to let trial lawyers run wild and keep inner-city kids trapped in failing schools, and will veto any sensible legislation that runs counter to those goals. He is turning back the clock in a state that was a laboratory for effective social-policy experimentation in the 1990s, including welfare reform that became the model for national reform in 1996. Is there another incumbent governor in America more worthy of defeat?